Inflation concern limits China bond gains

Surging prices of oil and copper, as well as signals of Covid restrictions lifting, boost inflation bets  

Inflation concern limits China bond gains

(ATF) China bonds inched higher Tuesday, with gains limited by rising concern that global inflation is back on the cards.

Gains were also limited by bonds on the Corporate sub-index, which reversed a sharp gain from yesterday.

The benchmark ATF China Bond 50 Index climbed 0.02% to 107.01. Corporates fell 0.01% and have been trading at a notional loss since the gauge fell below 100 in June. The Enterprise, Financial and Local Government sub-indexes were all largely unchanged.

Asian equities rallied on a reflation trade as economies around the world signalled they were preparing to reopen from winter Coronavirus lockdowns. Inflation worries were also stoked by copper prices, which rose to a 9-1/2 year high and as oil extended gains.

Rising inflation erodes the value of the fixed payments on bonds, making them less attractive to investors.

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